Asian Shares Lower, but Australian Market Bucks the Trend
The major Asian stock indexes are down across the board on Wednesday, but shares are higher in Australia. Asian investors are worried about global trade concerns, while Australian investors seem to be pleased with their central bank’s monetary policy decisions. The early price action indicates the euphoria from the weekend announcement of renewed trade talks between the United States and China appears to have worn off.
At 06:03 GMT, Japan’s Nikkei 225 Index is trading 21608.66, down 145.61 or -0.67%. Hong Kong’s Hang Seng Index is at 28788.49, down 87.07 or -0.30% and South Korea’s KOSPI is trading 2095.57, down 26.45 or -1.25%.
China’s Shanghai Index is trading 3017.89, down 26.06 or -0.86% and Australia’s S&P/ASX 200 Index is at 6685.10, up 31.90 or +0.48%.
Concerns over U.S. trade policy may have only capped gains in the United States on Tuesday, but they’re pressuring stocks in Asia and likely to lean on European stocks. Offsetting the optimism surrounding the Trump-Xi trade truce is a threat by the U.S. government on Monday to impose tariffs on $4 billion of additional European goods in a long-running dispute over aircraft subsidies.
The new threat is telling investors that there may be no end in sight to the trade disputes and that any thoughts that the resumption of trade talks between the U.S. and China helped eliminate the Fed’s uncertainties have been erased.
Shares in Australia are being boosted by the Reserve Bank of Australia’s ( RBA ) decision to cut interest rates for the second consecutive month. This places rates at an historic low. After the announcement Governor Lowe said that the bank will now wait and “monitor developments in the labor market closely and adjust monetary Policy if needed”.
Higher commodity prices are also providing support for the Australian stock market. They are being driven by rapidly rising iron ore prices. They rose to a fresh five-year high on Tuesday. The rally is being fueled by stronger Chinese steel demand and lower supply from the largest producers, Brazil and Australia. The news is helping to boost shares of miner stocks.
While the broad-based index may be rising, banking shares are trending lower on fears of stricter lending policies. Furthermore, lower interest rates tend to reduce the profits of banks.
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